Stock Hotlist for the Week of March 29th, 2021

Tech stocks have taken a beating lately. Since the beginning of this year tech stocks have dipped as investors moved their money into other sectors that they think will grow as the economy begins to open back up.  This bothers tech investors in the short term, but usually within the pain lie opportunities.  Among the rubble there are gems and today we will share three. 

 If you’re bullish on tech long term, then you may be bargain hunting for stocks whose share prices are down 25% or more from their 52-week highs.  Our team has a few recommendations if that sounds like you.

Okta Inc (OKTA)

For cloud database provider, Okta, nothing’s changed except the price of the stock.

Okta‘s stock is currently down 25% from its 52-week high, but that has more to do with a broader slide in the tech sector than Okta‘s financial performance.  In the most recent quarter, Okta‘s sales spiked 41% and the company increased its customers who spend more than $100,000 annually with the company by 33%.

Okta‘s full-year results were just as impressive.  Total revenue jumped 43% in fiscal 2021 to $835 million and subscription sales increased 44% from the previous year.  And there’s likely more where that came from.  The company’s management estimates fiscal 2022 sales will jump by 30%.

Okta isn’t exactly a household name, but this identity and access management (IAM) company is making waves in the tech sector.  Okta‘s services help companies set up permissions and access to data, making it easy for users to manage their logins and for companies to protect important data.

If projected estimates aren’t enough to peak your interest in Okta, consider that the IAM market is growing fast and is currently worth $55 billion.

Don’t let the company’s share price drop fool you — Okta‘s ability to grow its subscription sales and its addition of high-value $100,000+ customers prove that the company knows exactly what it’s doing in the IAM market. 

As more companies rely on IAM services to set up and manage their online permissions, many of them will turn to Okta‘s industry-leading tech — and as they do, Okta’s growth should help its share price to outpace the market over the long term.

Snowflake Inc (SNOW)

Our next pick is definitely on the forefront of its industry.  Every company on the planet is now chasing the cloud.  This trend also got a huge boost from the pandemic and it’s now in panic mode. Snowflake provides ways for companies to better utilize their data over the internet.

This is a simplified statement of what they do.  Just know that what they provide is very practical.  SNOW was an early mover and their potential is very real.  So real, in fact, that even Berkshire Hathaway (BRK-B) jumped on the bandwagon.  That was a huge surprise because of how long it took them to buy Apple (AAPL) stock. Warren Buffett had long shied away from tech and to see them embrace Snowflake is comforting.

Because it is new, it shouldn’t be part of the stocks to buy today.  But if you think that ‘if it’s good enough for Berkshire…’ is a viable investment argument, then SNOW stock is worth keeping an eye on. 

SNOW investors have to deal with the falling knife aspect of it.  In this case you can even say it’s a machete with a very small handle and a huge blade.  Similarly to DASH, SNOW is making fresh lows on the verge of going off the charts the wrong way.

If the stock can’t stabilize soon, it becomes hard to gauge how far down it can go.  Since there’s no real value in the financial statements yet, the floor could be too far below current price.  Meaning the risk may be too big to jump in with both feet.

The growth in it is phenomenal and it pretty much doubled revenues in two years.  But the expectations are extremely high and that could be a problem.  Everything is going right with improving profit margins and sales, but investors are temporarily freaked out, which could create a tempting opportunity.

C3.AI (AI) 

The last of our stocks to buy are shares of C3.AI.  One of 2020’s most talked about IPO’s, AI stock has more quietly of late, turning into one of the market’s more challenged investments.

Shares of the market’s only pure-play on artificial intelligence have tumbled roughly 62% from their February high while striking fresh all-time-lows last week.  The upside?  AI has become a more intelligent stock to buy as Wall Street dances, for the time being, with other companies striking its fancy.

Being cheap of course doesn’t necessarily spell value.  But InvestorPlace’s Luke Lango sees AI as one of the market’s “most compelling growth companies in the world today.” Luke is all about locating hypergrowth opportunities and with AI he’s estimating there’s a five-fold upside potential in this stock to buy.

Technically and as part of AI’s out-of-favor journey, shares recently failed to hold a hammer pattern, which set up a bullish lower-low, double-bottom.  Instead, the formation gave way to a confirmed bearish flag.  That brings us to today’s less-than-pleasant looking price chart.  And optimistically, much like last year, that has us reflecting on another case of mistaken identity by Wall Street and a stock to buy for the long-haul.

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